The Byron nuclear plant in Illinois.

Michael Kappel / Creative Commons

The Byron nuclear plant in Illinois.

What’s the future of nuclear in the Midwest? A state-by-state look

Correction appended.

Nuclear power was born in the Midwest, and helped fuel the region’s once-vibrant manufacturing sector for decades.

But the Midwest’s cheap power prices and, in some states, deregulated markets make it hard for nuclear to compete with cheaper natural gas and renewables.

Recent reports have identified numerous plants in Illinois, Michigan, Ohio and Nebraska as likely to shut down before 2025, while others have licenses expiring at the same time.

In recent months the planned closing of a publicly owned plant in Omaha and two Illinois plants owned by Exelon have been announced, and plants in Michigan and Ohio are also facing serious financial and technological challenges.

At a May Department of Energy summit, Marvin Fertel, CEO of the Nuclear Energy Institute, said the trade group has identified 15 to 20 reactors nationwide at risk of closure – though he did not name them – and called for a “sense of urgency” to protect nuclear plants.

So what does the future of nuclear energy look like in the Midwest? A lot depends on rate cases before public service commissions, proposed state legislation and the effects of the Clean Power Plan.

Deregulated vs. regulated states

“Many nuclear plants in the Midwest are under financial pressure,” said Matt Crozat, a policy director at the Nuclear Energy Institute. “The continuing low cost of natural gas combined with minimal demand growth since the recession are driving down wholesale power prices in the region. Nuclear plants are seeing reduced revenues and in some cases operating at a loss.”

Regulated energy markets are generally more favorable to expensive nuclear plants than deregulated areas where “merchant plants” must gamble on recouping their costs by selling power. About half of the nation’s reactors are in deregulated states, according to the Nuclear Energy Institute. The only new reactors being built or seriously proposed in recent years are in the South in regulated states.

“Plants operating in deregulated markets are at the most risk of early closure due to these economic forces as they are most exposed to short-term market forces,” said Crozat. “Regulated states can take a longer-term view through their integrated resource planning processes that usually look out beyond ten years to determine the best generation portfolio for their state.”

The financial firm UBS noted that while nuclear plant closures are happening most in deregulated markets, regulated utilities will also see a trend in closing plants “should the industry prove unable to rein in costs.”

Wisconsin, Minnesota, Nebraska, Missouri and Iowa are regulated states, where companies can charge ratepayers directly for their investments in power plants, if they get approval from the state utilities commission. Michigan is also mostly a regulated state, with utilities guaranteed control of 90 percent of the market and 10 percent open to competition.

Competing sources

Writing in 2013, Michael Wallace and George David Banks of the Center for Strategic and International Studies predicted that coal plant closures and their effect on natural gas prices could improve the outlook for nuclear plants, but the shift to renewables could have an opposite impact.

“We expect natural gas to benefit the most from the departure of coal from the grid, but fuel switching from coal to natural gas will increase prices for that feedstock, which will improve the outlook for nuclear in some merchant markets,” they wrote.

A June UBS report singled out Michigan’s Palisades plant and noted that ratepayers and the utility could benefit if the plant was replaced with cheaper alternatives. It noted a gas plant as the most likely alternative, but also described renewable energy’s role — specifically wind energy — in closing nuclear plants.

“What’s shifting in recent years with the latest PTC [Production Tax Credit] extension is the ability for utilities to opt for a yet cheaper resource than gas to supplant the nuclear generation — and one that is indeed carbon-free as well,” said UBS.

In both regulated and deregulated states, nuclear advocates and industry officials are pushing for nuclear power to be rewarded under the Clean Power Plan and state law and policy as a zero-emissions energy source. They also say nuclear should be emphasized and rewarded more for its role as reliable, baseload power that isn’t dependent on the sun shining, the wind blowing or the delivery of gas or coal, which can be interrupted during cold winters.

In the PJM market, nuclear plants have been handsomely rewarded for their reliability by large boosts in the “capacity” prices they are paid to be on call to provide power. The MISO market has also increased capacity prices to a lesser degree.

“Some would prefer to see clean energy come only from renewables, but if we let nuclear plants retire we are really digging the hole deeper on carbon emissions,” said Paul Meier, an environmental engineer at the Wisconsin Energy Institute who specializes in modeling different generation and emissions scenarios.

“If you close a 1,000-megawatt nuclear facility, it would take roughly 3,000 megawatts of wind capacity to produce an equivalent amount of (reliable) energy. How long would it take to add that much wind generation? If the priority is climate change, we should do all we can to keep those nuclear plants operating and then also add renewable energy and energy efficiency,” Meier said.

The Nuclear Energy Institute counts 99 nuclear reactors currently operating in the U.S., with some plants including multiple reactors. The NEI notes that 81 of the reactors have received license extensions or renewals to operate for up to 60 years total, in most cases meaning they are licensed to operate into the 2030s or 2040s.

Here is a breakdown of the Midwestern nuclear fleet and how their prospects are looking.

Illinois

Illinois is the country’s leading nuclear state, with six plants — all owned by Exelon — holding 11 reactors.

Exelon’s battle to win state legislation guaranteeing profits to its Illinois nuclear plants is being seen as a referendum on nuclear energy’s future, with prominent NASA climate scientist James Hansen visiting the state to advocate for nuclear energy.

Exelon had previously said up to three of its six plants could close without revenue assurances, in what critics said would amount to a $300 million per year bailout by ratepayers. Exelon has been pushing a bill that would guarantee nuclear energy sales, including through a “low-carbon portfolio standard.”

With legislation still stalled, in June Exelon announced that it is moving forward with the process to close its Clinton and Quad Cities plants by June 2017 and 2018, respectively. Watchdog groups note that the process is reversible, and Exelon is still pushing for legislation dubbed the Next Generation Energy Plan, which also includes provisions favorable to Exelon’s subsidiary ComEd. New York recently adopted a plan that will guarantee generous revenue for Exelon’s plants there, and nuclear advocates have called for something similar in Illinois.

Exelon has not made clear how much money it costs to run its Illinois plants or how much money it is losing. Critics have pointed out that Exelon has released contradictory information about the plants’ finances and what it needs to keep them running, and a 2015 report ordered by state officials found that Exelon’s financial situation was not as gloomy as the company claimed.

The regional transmission organizations that administer the grids and energy markets covering the Midwest — MISO and PJM — must do an analysis of the impact of any plant closings. PJM recently announced that its analysis of the Quad Cities plant found no significant impact on the grid’s reliability if the plant closes. PJM’s analysis of the Clinton plant has not been completed.

Dave Lundy, an energy expert and leader of a coalition opposing Exelon’s bill, said the legislature should not make any decisions related to Exelon until those analyses are done. He pointed out that if a power plant is necessary for grid stability and electricity supply, there is a mechanism wherein the transmission organization will subsidize its operation.

“If the grid operator concludes that the plant is needed, they’ll be offered a ‘must-run,’” Lundy said, referring to the aforementioned subsidy.  “If they conclude that plant is not needed, why are we subsidizing the plant? I understand and have great concern for the communities [where plants might close], but Exelon is making a financial decision at the behest of their investors, they’re not making a decision at the behest of the community.”

Critics also note that Exelon’s precursor company was among the most strident proponents of deregulation in the 1990s.

“They made money hand over fist during the first 16 years or so of deregulation before fracking drove down the price of power,” said Lundy. “So suck it up, keep the plants running a little bit longer and let the market take care of it.”

Michigan

Michigan gets about a quarter of its power from three nuclear plants. Two of those, the Donald C. Cook and Palisades plants, are in southwest Michigan along the Lake Michigan coast.

Nuclear energy opponents have long been calling for the shutdown of the Palisades plant, owned and run by Entergy. The single-reactor plant has had a host of technical and labor problems, including concerns about an inadequate safety culture. In March, the Nuclear Regulatory Commission announced results of an investigation finding that Palisades employees deliberately failed to report information related to a water storage tank leak.

The Cook plant in Bridgman about 40 miles southwest of Palisades is owned and operated by AEP and a local subsidiary, and contains two reactors. Only about 15 percent of its energy is sold in Michigan; more than half is sold to customers in Indiana, and the rest is sold on open energy markets. That means that like Illinois’ troubled nuclear fleet, the Cook plant is vulnerable to the impact of cheap natural gas and wind power and falling power demand that play out in energy markets.

The plant has also had its share of operating troubles, including spilling about 2,000 gallons of oil into Lake Michigan last fall. This summer a large steam pipe ruptured.

The Enrico Fermi plant run by DTE is in Monroe, on the Lake Erie coast, south of Detroit. DTE was licensed to build a new reactor at the plant, to be called Fermi 3. Fermi 2, built in 1988, has had a troubled history including a high number of shut-downs in 2012 and some in more recent years. Fermi’s unit 1 is decommissioned.

Ohio

FirstEnergy Corp.’s generation subsidiary owns Ohio’s two plants, Davis-Besse and Perry, both on the shores of Lake Erie near Toledo and about 40 miles from Cleveland, respectively.

Ohio is a deregulated state, and as in Illinois, for years there has been a heated battle over whether ratepayers should have to “bail out” Davis-Besse by guaranteeing the company profits for its energy even as it struggles to compete with cheaper natural gas-fired power.

In March, the state utilities commission approved the “bailout” for Davis-Besse and three coal-fired power plants, against a backdrop of opposition from citizens groups and dropping public support for nuclear power nationwide. But the fight over the proposal continues, as federal regulators halted the plan and then FirstEnergy submitted a revised version to state regulators.

The Perry plant, also operated by FirstEnergy, became the nation’s 100th nuclear plant when it opened in 1987. FirstEnergy has said it is committed to keeping the plant open, though it has also been identified as at-risk by independent analysts. In 2014, Perry made headlines for leaking radioactive tritium, though regulators said the threat to drinking water and residents was minimal.

Nebraska

In the regulated state of Nebraska, the Omaha Public Power District in Nebraska voted unanimously to close its Fort Calhoun nuclear plant, the smallest in the country at under 500 megawatts, by year’s end. The publicly owned plant, operated by Exelon on a contract, was costing ratepayers about $71 to generate a megawatt-hour of electricity, compared to about $20 on the open market.

The Nebraska Public Power District recently said that another publicly owned plant, the Cooper station, will continue to operate and is a good deal for ratepayers, generating a megawatt-hour for about $40. Though that is also above market rates, proponents note that it is baseload energy that is reliable and carbon-free.

Cooper has had its share of problems, including the risk of dangerous flooding from the nearby Missouri River.

Howard Learner, executive director of the Environmental Law & Policy Center, said the closing of the Fort Calhoun plant in Nebraska should send a message to other states.

“These are pragmatic Midwesterners, this isn’t something dreamed up in Berkeley or Cambridge,” Learner said of the decision to close Fort Calhoun. “Nebraska can easily pass on costs to their ratepayers, but they’ve looked at the Fort Calhoun nuclear plant” and decided not to. Learner said Fort Calhoun has parallels to the Clinton plant in Illinois, as both are single reactors with similar histories and financial situations, and both are operated by Exelon.

“The (Omaha) public power district analyzed the situation and decided to shut down the plant because of the changes in the economics of the power market and the opportunities to develop cleaner wind power resources,” Learner noted.

Minnesota

Minnesota, also a regulated state, has two nuclear plants, Prairie Island and Monticello. Both are owned by Xcel Energy and they provide about 30 percent of the energy for Xcel’s upper Midwest customers, not all of them in Minnesota. Minnesota also has a moratorium on new nuclear plants, but some have pushed to lift it, specifically to build another unit at Monticello.

Xcel Energy has said it could close Prairie Island before its license expires in 2033/2034, because of increased expenditures required to make upgrades required in response to the Fukushima Daiichi disaster, and other federal requirements.

Officials have said Xcel would need to spend $478 million by 2020 and another $600-900 million in the ensuing decade on upgrades if the plant keeps running.

Xcel made upgrades at the Monticello plant that several years ago ballooned to $748 million, more than double their predicted amount.

Other states

Iowa has one nuclear plant, the Duane Arnold Energy Center, owned by NextEra Energy Resources and two power cooperatives. In 2014 that plant was placed under increased federal scrutiny because of problems with backup equipment.

Wisconsin has only one operating plant, Point Beach, also run by NextEra Energy Resources. In the tourist town of Two Rivers on the shore of Lake Michigan, it has two units and provides about a sixth of the state’s power. Licenses for Point Beach’s two units have been extended to 2030 and 2033.

In 2013, Wisconsin’s Kewaunee nuclear plant owned by Dominion shut down. Though located in a regulated state, Kewaunee was a merchant plant that sold its electricity on the market, where it struggled to compete with cheaper power from natural gas and wind. In February, the Wisconsin legislature voted to lift a 33-year moratorium on new nuclear plant construction but no new plants are being considered.

Kansas’ sole nuclear plant, Wolf Creek, provides about 17 percent of the state’s electricity. Wolf Creek’s license was extended to 2045 and it is expected to keep operating. However, concerns have been raised about its readiness for tornadoes, as it sits in “Tornado Alley.”

Missouri likewise has one nuclear plant, the Callaway Energy Center, owned and run by Ameren. Ameren had proposed adding a second reactor to the plant, but last year that proposal was officially killed as officials said the financial outlook was dim and regulators would not allow the company to bill ratepayers for construction of the new reactor as it was ongoing. Ameren also tried but failed to get federal grants to build a small modular reactor, and ultimately scrapped that plan.

The waste issue

Even as the economics of generating nuclear power are debated, nuclear waste continues to be a conundrum for the industry and the government nationwide, and particularly for the Midwest. Currently, nuclear waste is stored on-site at most closed and operating reactors.

Since the Yucca Mountain permanent centralized storage plan was taken off the table, regulators have pushed for interim storage sites around the country and other longer-term solutions.

This spring the U.S. Department of Energy launched a “consent-based” process to find sites, including meetings with residents and stakeholders.

Dave Lochbaum, director of the nuclear safety project for the Union of Concerned Scientists, said that extra vigilance is necessary as the industry is under increasing financial pressure.

“We’re a little concerned cost-cutting could cut muscle instead of fat,” Lochbaum said. “There’s pressure to reduce costs, and that’s manifested itself in owners delaying certain repairs or replacements, they just don’t have the money to do everything that’s on the to-do list.”

However, Lochbaum said he is confident the Nuclear Regulatory Commission, industry trade groups, watchdog groups and plant owners create a system of checks and balances that should avoid significant safety risks.

“They recognize that if they make mistakes during that triage process,” he said, “they have a billion dollar investment they could lose.”

Editor’s note: This story has been updated to correct that the Cooper plant is not operated by Exelon; that the Fermi plant is located on Lake Erie, not Lake Huron; and to correct Michael Wallace’s first name.

19 thoughts on “What’s the future of nuclear in the Midwest? A state-by-state look

  1. Subsidizing nuclear power is subsidizing Exelons CEO’s and upper managements multi-million dollar salaries. Let them actually manage the bloated plant staff and reduce costs.

    • Does that comment somehow not apply to renewables, which are much more subsidized?

  2. Exelon does not operate Cooper Nuclear Station. They are operated by Entergy.

      • To correctly clarify further, Cooper Nuclear Station is owned and operated by the Nebraska Public Power District. We have a support services agreement with Entergy to provide management support. Entergy does not own or operate the facility.

        Jeanne Schieffer
        Corporate Communications & Public Relations Manager
        Nebraska Public Power District

  3. I would support the closing of the older larger reactors and the replacement of that capacity with new SMRs on the same sites. I would have no problem providing rate assurances, subsidies, or something similar to maintain a varied grid mix. This would also minimize the terror attack risk associated with larger reactors. It would allow us to re-utilize existing distribution and switch-gear. It would place the SMRs at locations that already have Nukes so NYMBY issues would be reduced. It would reduce the accident / meltdown risk. It would potentially allow us to actually use existing Nuke waste as fuel for the SMRs (if you believe some who make this claim).

    I want to see a cleaner grid mix and a diversified grid mix and Nukes are part of that in my opinion.

    • I agree with your support for new nuclear, especially SMRs, but closing our existing, large reactors while fossil fuels (including coal) still generate a large fraction of our electricity cannot be justified. Using new nuclear (SMRs, etc..) and/or renewables to replace existing nuclear, instead of existing coal, is tantamount to saying that existing reactors are worse (for public health and the environment) than coal plants are. Nothing could be further from the truth.

      Coal plants are *thousands* of times worse. US coal plant pollution causes almost 10,000 deaths *annually* and is a leading source of US CO2 emissions. US nuclear plants have never had any measurable public health impact and have negligible global warming impact.

      Let’s develop SMRs, and renewables, and use them to replace coal first. After coal is largely gone, we can discuss whether additional clean generation should be used to replace gas plants, or existing nuclear plants. IMO, existing nuclear is also far preferable to gas. If we had fair, technology-neutral policies (such as a price on CO2 emissions) that gave nuclear the credit it deserves for being a non-emitting source, this (above) is the sort of thing we would see.

  4. Re: “The Enrico Fermi plant run by DTE is in Monroe, on the Lake Huron coast, south of Detroit.”

    The Fermi nuclear power plant is actually located on the western Lake Erie shoreline in Southeast Michigan, between Detroit and Toledo.

    • The source you site is known to post opinion based anti-nuclear bias arrivals with no connection with reality.

      In fact much of the difference in cost between cost in producing safe reliable clean energy can be linked to the number of safety cultures that are cultivated at Nuclear power plants are almost non-existent at Natural Gas and coal plants. There have been more people in communities killed by unsafe natural gas and coal plants than all industrial accidents combined world wide at nuclear power plants ever. Remember we are talking commercial power plants not nuclear weapons grade producing plants like chernobyl.

      The amount of nuclear waste stored on site of our aging power plants is small fraction in compared to the size of the related plants. When you also compare it to the carbon produced by our other less safe and reliable natural gas and coal.

  5. Folks, we’re talking about the Midwest. The Saudi Arabia of wind. The place where unsubsidized wind is producing electricity for less than 4 cents per kWh and the price is dropping. That should be the starting point. Not natural gas. Certainly not new nuclear.

    The installed price of new wind was $1.64/watt in 2014 and has dropped lower.

    The installed price of new nuclear, based on the currently being constructed Vogtle plants, is $8.33/watt.

    The electricity produced has to cover those installed prices. And cover operating expenses which are a bit higher for nuclear than wind (no fuel costs). Clearly wind is going to give the area much cheaper electricity than nuclear.

    Lead with your strength.

    Should we keep the older, paid off reactors operating? Yes, if we’re sure they are really safe. As we push out past 40 years we’re dealing with plants with decades of wear, tear, and metal embrittlement. If we’re unsure about a reactor then it would probably be wise to do a push to install enough wind and NG backup to allow that reactor to close. Much cheaper than a meltdown.

    • Sounds fine, but unfortunately, wind does not generate power all the time (as the wind doesn’t blow all the time). The Midwest should, at a minimum, keep it’s existing nuclear plants open. If we don’t, we will actually see ourselves move backwards on the global warming issue (i.e., we will see power-sector CO2 emissions actually rise). The reason being that emissions free sources that generate power *some* of the time (wind) will be replacing emissions free sources that produce power *all* of the time (nuclear).

    • Your numbers are unfortunately based on subsidized wind and solar which are actually much higher then Nuclear in most markets. They also are not 100% reliable. Nuclear and renewable complement each other.

  6. Wind Farm & Solar Farms are not smart ways to make electric power.
    It would cost over $29 Trillion to generate America’s baseload electric power with a 50 / 50 mix of wind and solar farms, on parcels of land totaling the area of Indiana. Or:
    It would cost over $18 Trillion with Concentrated Solar Power (CSP) farms in the southwest deserts, on parcels of land totaling the area of West Virginia. Or:
    We could do it for less than $3 Trillion with AP-1000 Light Water Reactors, on parcels totaling a few square miles. Or:
    We could do it for $1 Trillion with liquid-fueled Molten Salt Reactors, on the same amount of land, but with no water cooling, no risk of meltdowns, and the ability to use our stockpiles of nuclear “waste” as a secondary fuel. Thorium Molten Salt Reactors has always been the best answer to get the world off all fossil fuels including off all gas and diesel transportation fuels.
    http://energyrealityproject.com/lets-run-the-numbers-nuclear-energy-vs-wind-and-solar/

  7. Another error:

    “Writing in 2013, Mark Wallace and George David Banks of the Center for Strategic and International Studies.”

    Should be Mike (or Michael) Wallace, not Mark Wallace!

  8. Amazing how all of Dave Lundy’s testimony (at the end of the Illinois section) only talks about issues of sufficient power and grid reliability, and completely ignores the much more important issues of air pollution and CO2 (neither of which are emitted by nuclear). That’s what it’s all about, not grid reliability of sufficient power reserves. Is he being deliberately clueless, or does he not understand, or value, those benefits. The notion that nuclear should not be given any advantage at all, even versus coal plants, is patently ridiculous.

    Let me guess, clean air is a benefit, but only if it comes from renewables. That is, large subsidies for renewables are OK, but much smaller subsidies for nuclear are not. They are (all the sudden) “unfair”. Unfair to who? Unfair to coal plants? Seriously?? If Illinois (and other Midwest states) need to close power plants, it should be coal plants, entirely. Heard of global warming? How is it that we’re in this ridiculous situation?

    It is nuclear that is not being treated fairly. We demand that it expend enormous amounts of money to be a clean source (i.e., to reduce even the chance of ever polluting to near zero), but then we place it in direct economic competition with truly dirty sources that routinely pollute the environment en masse. And then we give large subsidies (or outright mandates) to other clean sources (renewables) but not nuclear.

    There is no defensible reason to treat nuclear any differently than renewables, under policy. Either that, or let nuclear pollute like fossil plants do (heaven forbid!!). If it were allowed to pollute, you could probably produce nuclear electricity at 1/3 the cost.